iPad Mini stock dwindles, supplies to remain tight

Apple kick-started pre-orders of the iPad Mini early today, and within hours, sold out the white model in all three Wi-Fi configurations.

Pre-sales for the iPad Mini -- at 7.9-in., Apple's first downsized tablet -- started just after midnight PT Friday. Computerworld ordered one without any problems at that time.

But within hours, the white iPad Mini was already backordered, with Apple's online store noting orders would ship in two weeks. The black iPad Mini, however, remained available in all storage sizes; as of noon ET, Apple was still promising to deliver the tablet by Nov. 2.

That's when the iPad Mini is to go on sale at Apple's retail stores and those of some of its brick-and-mortar partners, such as Best Buy.

The only version currently available is the Wi-Fi iPad Mini; the cellular model, which supports both 3G and LTE and will run on the networks of AT&T, Sprint and Verizon in the U.S., will not go on sale until mid-November.

It's no surprise that the iPad Mini has run through some of its pre-order stock. Earlier this week, Richard Shim, an analyst with NPD DisplaySearch, said that shortages were inevitable.

"Panel supply chain indications point to an even-more-than-typical tightness for the iPad Mini," said Shim in an interview.

New Apple products are almost always in short supply at launch, but the iPad Mini is a special case, Shim argued. Apple is winding down its relationship with Samsung, a long-time supplier of displays, and replacing it with AU Optronics (AUO), a Taiwanese company better known for making notebook displays.

"We expect some yield issues at AUO. That frequently happens when a company goes into a new category," said Shim. "And Apple is a pretty particular customer."

Apple is continuing to order panels from LG Display (LGD), one of its usual suppliers, for the Mini.

But the opening round of any relationship, said Shim, is often rocky, as the component maker retools, then typically struggles with both yield and meeting Apple's quality requirements. "It takes time to figure it all out," he said.

Although Shim declined to speculate on the end of the Apple-Samsung display relationship, others have not been reticent, and have pinned the divorce on the acrimonious patent wars between the two smartphone makers.

Estimates of Apple's orders for iPad Minis have ranged from a low of 5 million to a high of 10 million. "The upper end is fairly typical of a launch of a tablet from Apple," Shim said.

It's unlikely that the iPad Mini's screen presents any technical problems to display makers: After all, its 1024-x-768-pixel resolution is nothing special, and in fact is the same as that of the first two generations of the full-figured iPad.

"It's not the resolution, which is fairly common to the iPad, but simply one of starting up a relationship with AUO," said Shim.

Yesterday, Apple CFO Peter Oppenheimer did not reveal the company's build plans for the iPad Mini, but did say, "[We] want to make a large number" of the tablets.

"The iPad Mini has higher costs and the gross margin is significantly below our cooperate average [and] we're beginning [at] the higher cost curve," said Oppenheimer.

Cook was more explicit in his defense of the price when asked about former CEO Steve Jobs' famous rejection of smaller tablets. "We would not make one of the 7-in. tablets," said Cook. "We don't think they're good products, and we would never make one. [The iPad Mini] is not a compromised product like the 7-in. tablets. It's in a whole different league."

Analyst predictions of iPad Mini sales this quarter are across the map. Brian White of Topeka Capital Markets, for example, has set his target at 7 million for this year's fourth quarter, and said his estimate of 30 million for the 2013 fiscal year, which started Oct. 1, 2012, is conservative.

Brian Marshall, of the ISI Group, pegged iPad Mini sales for the fourth quarter at approximately 5 million, bringing in about $1.5 billion in revenue. "While an incremental positive, we do not expect it to meaningfully move the needle as we estimate iPad Mini will represent <3% of gross profits for the December 2012 quarter," he wrote in a note to clients earlier this week.

The iPad Mini is available for pre-order in 26 countries, including the U.S., Canada, France, Germany, Spain and the U.K. Retail sales will begin a week from today, Nov. 2, in 34 markets.

Although the white iPad Mini is already out of stock, the black configuration -- Apple calls it 'Black & Slate' -- was still available mid-day Friday, with delivery by Nov. 2.

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